Notes to the financial statements

1.Australian Accounting Standards

a)General

The Commission’s financial statements for the year ended 30 June 2017 have been prepared in accordance with Australian Accounting Standards. The term ‘Australian Accounting Standards’ includes Standards and Interpretations issued by the Australian Accounting Standards Board (AASB).

The Commission has adopted any applicable, new and revised Australian Accounting Standards from their operative dates.

b)Early adoption of standards

The Commission cannot early adopt an Australian Accounting Standard unless specifically permitted by Treasurer’s Instruction 1101 - Application of Australian Accounting Standards and Other Pronouncements.There has been no early adoption of Australian Accounting Standards that have been issued or amended (but not operative) by the Commission for the annual reporting period ended 30 June 2017.

2.Summary of significant accounting policies

a)General statement

The Commission is a not-for-profit reporting entity that prepares general purpose financial statements in accordance with Australian Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the AASB as applied by the Treasurer’s Instructions. Several of these are modified by the Treasurer’s Instructions to vary application, disclosure, format and wording.

The Financial Management Act 2006 and the Treasurer’s Instructions impose legislative provisions that govern the preparation of financial statements and take precedence over Australian Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the AASB.

Where modification is required and has had a material or significant financial effect upon the reported results, details of that modification and the resulting financial effect are disclosed in the notes to the financial statements.

b)Basis of preparation

The financial statements have been prepared on the accrual basis of accounting using the historical cost convention.

The accounting policies adopted in the preparation of the financial statements have been consistently applied throughout all periods presented unless otherwise stated.

The financial statements are presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000).

Refer to Note 3 ‘Judgements made by management in applying accounting policies’ discloses judgements that have been made in the process of applying the Commission’s accounting policies resulting in the most significant effect on the amounts recognised in the financial statements.

Refer to Note 4 ‘Key sources of estimation uncertainty’ discloses key assumptions made concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

c)Reporting entity

The reporting entity comprises the Commission.

Mission

The Commission’s mission is to lead and promote excellence and integrity in the public sector.

The Commission is predominantly funded by Parliamentary appropriations. It provides training services on a fee-for-service basis. The fees charged are determined on a cost-recovery basis unless subsidised by the Commission and agreed upon with Treasury.

Services

The Commission provides the following services.

Service 1 - Public sector leadership - This service develops and supports current and future leaders and builds the capacity of the public sector workforce through the delivery of leadership and workforce development products, programs and training.

Service 2 - Assistance and support - This service provides advice, assistance and support to public sector bodies and employees on a range of administration, management, integrity and governance matters.

Service 3 - Oversight and reporting - This service progresses changes to legislation and develops policies to improve public administration and management and provides independent oversight to monitor and report to the Parliament of Western Australia and Ministers on compliance with the Public Sector Management Act 1994, the Corruption, Crime and Misconduct Act 2003, the Public Interest Disclosure Act 2003 and Part IX of the Equal Opportunity Act 1984.

d)Contributed equity

AASB Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities requires transfers in the nature of equity contributions, other than as a result of a restructure of administrative arrangements, to be designated by the Government (the owner) as contributions by owners (at the time of, or prior to transfer) before such transfers can be recognised as equity contributions. Capital appropriations have been designated as contributions by owners by Treasurer’s Instruction 955 Contributions by Owners Made to Wholly Owned Public Sector Entities and have been credited directly to Contributed Equity.

The transfer of net assets to/from other agencies, other than as a result of a restructure of administrative arrangements, are designated as contributions by owners where the transfer is non-discretionary and non-reciprocal.

e)Income

Revenue recognition

Revenue is recognised and measured at the fair value of consideration received or receivable. Revenue is recognised for the major business activities as follows.

Provisio​n of services

Revenue is recognised on delivery of the service to the client or by reference to the stage of completion of the transaction.

Service appr​opriations

Service appropriations are recognised as revenues at fair value in the period in which the Commission gains control of the appropriated funds. The Commission gains control of appropriated funds at the time those funds are deposited into the Commission’s bank account or credited to the ‘Amounts receivable for services’ (holding account) held at Treasury.

Net appropriation dete​rmination

The Treasurer may make a determination providing for prescribed receipts to be retained for services under the control of the Commission. In accordance with the most recent determination, as quantified in the 2016-17 Budget Statements, the Commission retained $1 649 000 ($1 038 000 in 2016) from the following:

Grants, donations, gifts and other non-reciprocal contributions

Revenue is recognised at fair value when the Commission obtains control over the assets comprising the contributions, usually when cash is received.

Other non-reciprocal contributions that are not contributions by owners are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased, if not donated.

Royalties for Regions funds are recognised as revenue at fair value in the period in which the Commission obtains control over the funds. The Commission obtains control of the funds at the time the funds are deposited into the Commission’s bank account.

Gai​ns

Realised and unrealised gains are usually recognised on a net basis. These include gains arising on the disposal of non-current assets and revaluations of non-current assets.

f)Property, plant and equipment

Capitalisation/expensing of assets

Items of property, plant and equipment costing $5000 or more are recognised as assets and the cost of utilising assets is expensed (depreciated) over their useful lives. Items of property, plant and equipment costing less than $5000 are immediately expensed direct to the ‘Statement of comprehensive income’ (other than where they form part of a group of similar items which are significant in total).

Initial recognition and measurement

Property, plant and equipment are initially recognised at cost.

For items of property, plant and equipment acquired at no cost or for nominal cost, the cost is their fair value at the date of acquisition.

Subsequent measurement

The Commission does not hold land, buildings or infrastructure assets. All items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses.

Depreciation

All non-current assets having a limited useful life are systematically depreciated over their estimated useful lives in a manner that reflects the consumption of their future economic benefits.

Depreciation is calculated using the straight line method, using rates which are reviewed annually. Estimated useful lives for each class of depreciable asset are:

Computer hardware - 3 years

Office equipment - 5 years

Leasehold improvement - 5 to 10 years dependent on the life of the lease

Furniture, fixtures and fittings - 10 years.

g)Intangible assets

Capitalisation/expensing of assets

Acquisitions of intangible assets costing $5000 or more and internally generated intangible assets costing $50 000 or more are capitalised. The cost of utilising the assets is expensed (amortised) over their useful lives. Costs incurred below these thresholds are immediately expensed directly to the ‘Statement of comprehensive income’.

Intangible assets are initially recognised at cost. For assets acquired at no cost or for nominal cost, the cost is their fair value at the date of acquisition.

The cost model is applied for subsequent measurement requiring the asset to be carried at cost, less any accumulated amortisation and accumulated impairment losses.

Amortisation for intangible assets with finite useful lives is calculated for the period of the expected benefit (estimated useful life which is reviewed annually) on the straight line basis. All intangible assets controlled by the Commission have a finite useful life and zero residual value.

The expected useful lives for each class of intangible asset are:

Software (a) - 3 years

Licences - 3 years.

(a) Software that is not integral to the operation of any related hardware.

Licences

Licences have a finite useful life and are carried at cost less accumulated amortisation and accumulated impairment losses.

Computer software

Software that is an integral part of the related hardware is recognised as property, plant and equipment. Software that is not an integral part of the related hardware is recognised as an intangible asset. Software costing less than $5000 is expensed in the year of acquisition.

Website costs

Website costs are charged as expenses when they are incurred unless they relate to the acquisition or development of an asset when they may be capitalised and amortised. Generally, costs in relation to feasibility studies during the planning phase of a website and ongoing costs of maintenance during the operating phase are expensed. Costs incurred in building or enhancing a website that can be reliably measured are capitalised to the extent that they represent probable future economic benefits.

h)Impairment of assets

Property, plant and equipment and intangible assets are tested for any indication of impairment at the end of each reporting period. Where there is an indication of impairment, the recoverable amount is estimated. Where the recoverable amount is less than the carrying amount, the asset is considered impaired and is written down to the recoverable amount and an impairment loss is recognised. Where an asset measured at cost is written down to recoverable amount, an impairment loss is recognised in profit or loss. Where a previously revalued asset is written down to recoverable amount, the loss is recognised as a revaluation decrement in other comprehensive income. As the Commission is a not-for-profit entity, unless a specialised asset has been identified as a surplus asset, the recoverable amount is the higher of an asset’s fair value less costs to sell and depreciated replacement cost.

The risk of impairment is generally limited to circumstances where an asset’s depreciation is materially understated, where the replacement cost is falling or where there is a significant change in useful life. Each relevant class of assets is reviewed annually to verify that the accumulated depreciation/amortisation reflects the level of consumption or expiration of the asset’s future economic benefits and to evaluate any impairment risk from falling replacement costs.

Intangible assets with an indefinite useful life and intangible assets not yet available for use are tested for impairment at the end of each reporting period irrespective of whether there is any indication of impairment.

The recoverable amount of assets identified as surplus assets is the higher of fair value less costs to sell and the present value of future cash flows expected to be derived from the asset. Surplus assets carried at fair value have no risk of material impairment where fair value is determined by reference to market-based evidence. Where fair value is determined by reference to depreciated replacement cost, surplus assets are at risk of impairment and the recoverable amount is measured. Surplus assets at cost are tested for indications of impairment at the end of each reporting period.

i)Leases

The Commission holds operating leases for its office accommodation and motor vehicles. Operating lease payments are expensed on a straight line basis over the lease term as this represents the pattern of benefits derived from the leased property and vehicles.

j)Financial instruments

In addition to cash, the Commission has two categories of financial instrument:

Loans and receivables

Financial liabilities measured at amortised cost.

Financial instruments have been disaggregated into the following classes.

Financial assets

Cash and cash equivalents

Restricted cash and cash equivalents

Receivables

Amounts receivable for services

Financial liabilities

Payables

Initial recognition and measurement of financial instruments is at fair value which normally equates to the transaction cost or the face value. Subsequent measurement is at amortised cost using the effective interest method.

The fair value of short-term receivables and payables is the transaction cost or the face value because there is no interest rate applicable and subsequent measurement is not required as the effect of discounting is not material.

k)Cash and cash equivalents

For the purpose of the ‘Statement of cash flows’, cash and cash equivalent (and restricted cash and cash equivalent) assets comprise cash on hand and short-term deposits with original maturities of three months or less that are readily convertible to a known amount of cash and which are subject to insignificant risk of changes in value.

l)Accrued salaries

Accrued salaries (refer Note 24 ‘Payables’) represent the amount due to staff but unpaid at the end of the financial year. Accrued salaries are settled within a fortnight of the financial year end. The Commission considers the carrying amount of accrued salaries to be equivalent to its fair value.

The accrued salaries suspense account (see Note 17 ‘Restricted cash and cash equivalents’) consists of amounts paid annually into a suspense account over a period of 10 financial years to largely meet the additional cash outflow in each eleventh year when 27 pay days occur instead of the normal 26. No interest is received on this account.

m) Amounts receivable for services (holding account)

The Commission receives funding on an accrual basis. The appropriations are paid partly in cash and partly as an asset (holding account receivable). The accrued amount receivable is accessible on the emergence of the cash funding requirement to cover leave entitlements and asset replacement.

n)Receivables

Receivables are recognised at original invoice amount less an allowance for any uncollectible amounts (i.e. impairment). The collectability of receivables is reviewed on an ongoing basis and any receivables identified as uncollectible are written-off against the allowance account. The allowance for uncollectible amounts (doubtful debts) is raised when there is objective evidence that the Commission will not be able to collect the debts. The carrying amount is equivalent to fair value as it is due for settlement within 30 days.

o)Payables

Payables are recognised at the amounts payable when the Commission becomes obliged to make future payments as a result of a purchase of assets or services. The carrying amount is equivalent to fair value, as settlement is generally within 30 days.

p)Provisions

Provisions are liabilities of uncertain timing or amount and are recognised where there is a present legal or constructive obligation as a result of a past event and when the outflow of resources embodying economic benefits is probable and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at the end of each reporting period.

Provisions - employee benefits

All annual leave and long service leave provisions are in respect of employees’ services up to the end of the reporting period.

Annual leave and Long service lea​ve

Annual leave is not expected to be settled wholly within 12 months after the end of the reporting period and is, therefore, considered to be ‘other long-term employees benefits’.

Annual and long service leave not expected to be settled within 12 months after the end of the reporting period is recognised and measured at the present value of amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

When assessing expected future payments, consideration is given to expected future wage and salary levels, including non-salary components such as employer superannuation contributions, as well as the experience of employee departures and periods of service. The expected future payments are discounted using the market yields at the end of the reporting period on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash flows.

The provision for annual leave is classified as a current liability as the Commission does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Unconditional long service leave provisions are classified as current liabilities as the Commission does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. Conditional long service leave provisions are classified as non-current liabilities because the Commission has an unconditional right to defer the settlement of the liability until the employee has completed the requisite years of service.

q)Superannuation

The Government Employees Superannuation Board (GESB) and other fund providers administer public sector superannuation arrangements in Western Australia in accordance with legislative requirements. Eligibility criteria for membership in particular schemes for public sector employees vary according to commencement and implementation dates.

Eligible employees contribute to the ‘Pension Scheme’, a defined benefit pension scheme closed to new members since 1987, or to the ‘Gold State Superannuation Scheme’ (GSS), a defined benefit lump sum scheme closed to new members since 1995.

Employees commencing employment prior to 16 April 2007 who were not members of either the Pension Scheme or the GSS became non-contributory members of the ‘West State Superannuation Scheme’ (WSS). Employees commencing employment on or after 16 April 2007 became members of the ‘GESB Super Scheme’ (GESBS). From 30 March 2012 existing members of the WSS or GESBS and new employees have been able to choose their preferred superannuation fund provider. The Commission makes contributions to GESB or other fund providers on behalf of employees in compliance with the Commonwealth Government’s Superannuation Guarantee (Administration) Act 1992. Contributions to these accumulation schemes extinguish the Commission’s liability for superannuation charges in respect of employees who are not members of the Pension Scheme or GSS.

The GSS is a defined benefit scheme for the purposes of employees and whole-of-government reporting. However, it is a defined contribution plan for agency purposes because the concurrent contributions (defined contributions) made by the Commission to GESB extinguish the agency’s obligations to the related superannuation liability.

The Commission has no liabilities under the Pension Scheme or the GSS. The liabilities for the unfunded Pension Scheme and the unfunded GSS transfer benefits attributable to members who transferred from the Pension Scheme are assumed by the Treasurer. All other GSS obligations are funded by concurrent contributions made by the Commission to GESB.

GESB makes all benefit payments in respect of the Pension Scheme and GSS and is recouped from the Treasurer for the employer’s share.

Provisions - other

Employment on-costs

Employment on-costs, including workers’ compensation insurance, are not employee benefits and are recognised separately as liabilities and expenses when the employment to which they relate has occurred. Employment on-costs are included as part of ‘Other expenses’ and are not included as part of the Commission’s ‘Employee benefits expense’. The related liability is included in ‘Employment on-costs provision’.

Superannuation expense

Superannuation expense is recognised in the profit or loss of the ‘Statement of comprehensive income’ and comprises employer contributions paid to the GSS (concurrent contributions), the WSS, GESBS or other superannuation funds. The employer contribution paid to GESB in respect of the GSS is paid back into the Consolidated Account by GESB.

r)Assets and services received free of charge or for nominal cost

Assets or services received free of charge or for nominal cost, that the Commission would otherwise purchase if not donated, are recognised as income at the fair value of the assets or services where they can be reliably measured. A corresponding expense is recognised for services received. Receipts of assets are recognised in the ‘Statement of financial position’.

Assets or services received from other State Government agencies are separately disclosed under Income from State Government in the ‘Statement of comprehensive income’.

s)Comparative figures

Comparative figures are, where appropriate, reclassified to be comparable with the figures presented in the current financial year.

3.Judgements made by management in applying accounting policies

The preparation of financial statements requires management to make judgements about the application of accounting policies that have a significant effect on the amounts recognised in the financial statements. The Commission evaluates these judgements regularly.

Operating lease commitments

The Commission has entered into a number of leases for office accommodation and fleet vehicles and it has been determined that the lessor retains substantially all the risks and rewards incidental to ownership. Accordingly, these leases have been classified as operating leases.

4.Key sources of estimation uncertainty

Key estimates and assumptions concerning the future are based on historical experience and various other factors that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

Long service leave

Several estimations and assumptions used in calculating the Commission’s long service leave provision include expected future salary rates, discount rates, employee retention rates and expected future payments. Changes in these estimations and assumptions may impact on the carrying amount of the long service leave provision.

AASB 2014-3

The Commission establishes Joint Operations in pursuit of its objectives and does not routinely acquire interests in Joint Operations. Therefore, there is no financial impact on application of the Standard.

AASB 2014-4

The adoption of this Standard has no financial impact for the Commission as depreciation and amortisation is not determined by reference to revenue generation, but by reference to consumption of future economic benefits.

AASB 2014-9

This Standard amends AASB 127, and consequentially amends AASB 1 and AASB 128, to allow entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements. As the Commission has no joint ventures and associates, the application of the Standard has no financial impact.

AASB 2015-1

These amendments arise from the issuance of International Financial Reporting Standard Annual Improvements to IFRSs 2012‑2014 Cycle in September 2014, and editorial corrections. The Commission has determined that the application of the Standard has no financial impact.

AASB 2015-2

This Standard amends AASB 101 to provide clarification regarding the disclosure requirements in AASB 101. Specifically, the Standard proposes narrow-focus amendments to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgement when applying a Standard in determining what information to disclose in their financial statements. There is no financial impact.

AASB 2015-6

The amendments extend the scope of AASB 124 to include application by not-for-profit public sector entities. Implementation guidance is included to assist application of the Standard by not-for-profit public sector entities. There is no financial impact.

AASB 2015-10

This Standard defers the mandatory effective date (application date) of amendments to AASB 10 & AASB 128 that were originally made in AASB 2014‑10 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2016. There is no financial impact.

Future impact of Australian Accounting Standards not yet operative

The Commission cannot early adopt an Australian Accounting Standard unless specifically permitted by Treasurer's Instruction 1101Application of Australian Accounting Standardsand Other Pronouncements or by an exemption from TI 1101. Where applicable, the Commission plans to apply the following Australian Accounting Standards from their application date.

AASB 9 - Financial Instruments

Operative for reporting periods beginning on/after 1 January 2018

This Standard supersedes AASB 139 Financial Instruments: Recognition and Measurement, introducing a number of changes to accounting treatments. The mandatory application date of this Standard is currently 1 January 2018 after being amended by AASB 2012-6, AASB 2013-9 and AASB 2014-1 Amendments to Australian Accounting Standards. The Commission has not yet determined the application or the potential impact of the Standard.

AASB 15 - Revenue from Contracts with Customers

Operative for reporting periods beginning on/after 1 January 2018

This Standard establishes the principles that the Commission shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The Commission has not yet determined the application or the potential impact of the Standard.

AASB 16 - Leases

Operative for reporting periods beginning on/after 1 January 2019

This Standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The Commission has not yet determined the application or the potential impact of the Standard.

AASB 1057 - Application of Australian Accounting Standards

Operative for reporting periods beginning on/after 1 January 2016

This Standard lists the application paragraphs for each other Standard (and Interpretation), grouped where they are the same. There is no financial impact.

This Standard makes consequential amendments to other Australian Accounting Standards and Interpretations as a result of issuing AASB 9 in December 2010.

The mandatory application date of this Standard has been amended by AASB 2012-6 and AASB 2014-1 to 1 January 2018. The Commission has not yet determined the application or the potential impact of the Standard.

AASB 2014-1 - Amendments to Australian Accounting Standards

Operative for reporting periods beginning on/after 1 January 2018

Part E of this Standard makes amendments to AASB 9 and consequential amendments to other Standards. It has not yet been assessed by the Commission to determine the application or potential impact of the Standard.

The Commission establishes Joint Operations in pursuit of its objectives and does not routinely acquire interests in Joint Operations. Therefore, there is no financial impact on application of the Standard.

The adoption of this Standard has no financial impact for the Commission as depreciation and amortisation is not determined by reference to revenue generation, but by reference to consumption of future economic benefits.

This Standard gives effect to the consequential amendments to other Australian Accounting Standards (including Interpretations) arising from the issuance of AASB 15. The mandatory application date of this Standard has been amended by AASB 2015-8 to 1 January 2018. The Commission has not yet determined the application or the potential impact of the Standard.

This Standard gives effect to the consequential amendments to Australian Accounting Standards (including Interpretations) arising from the issuance of AASB 9 (December 2014). The Commission has not yet determined the application or the potential impact of the Standard.

This Standard amends AASB 127, and consequentially amends AASB 1 and AASB 128, to allow entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements. The Commission has not yet determined the application or the potential impact of the Standard.

AASB 2014-10 - Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture [AASB 10 & 128]

Operative for reporting periods beginning on/after 1 January 2016

This Standard amends AASB 10 and AASB 128 to address an inconsistency between the requirements in AASB 10 and those in AASB 128 (August 2011), in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The Commission has not yet determined the application or the potential impact of the Standard.

These amendments arise from the issuance of International Financial Reporting Standard Annual Improvements to IFRSs 2012–2014 Cycle in September 2014, and editorial corrections. The Commission has determined that the application of the Standard has no financial impact.

This Standard amends AASB 101 to provide clarification regarding the disclosure requirements in AASB 101. Specifically, the Standard proposes narrow-focus amendments to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgement when applying a Standard in determining what information to disclose in their financial statements. There is no financial impact.

The amendments extend the scope of AASB 124 to include application by not-for-profit public sector entities. Implementation guidance is included to assist application of the Standard by not-for-profit public sector entities. There is no financial impact.

This Standard amends the mandatory effective date (application date) of AASB 15 Revenue from Contracts with Customers so that AASB 15 is required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2017. The Commission has not yet determined the application or the potential impact of AASB 15.

This Standard defers the mandatory effective date (application date) of amendments to AASB 10 & 128 that were originally made in AASB 2014-10 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2016. The Commission has not yet determined the application or the potential impact of AASB 2014-10.

This Standard amends AASB 107 Statement of Cash Flows (August 2015) to require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. There is no financial impact.

This Standard clarifies identifying performance obligations, principal versus agent considerations, timing of recognising revenue from granting a licence, and provides further transitional provisions to AASB 15. The Commission has not yet determined the application or the potential impact.

This Standard clarifies that the recoverable amount of primarily non-cash-generating assets of not-for-profit entities, which are typically specialised in nature and held for continuing use of their service capacity, is expected to be materially the same as fair value determined under AASB 13 Fair Value Measurement. The Commission has not yet determined the application or the potential impact.

7.Compensation of key management personnel

The Commission has determined that key management personnel include Ministers and senior officers of the Commission. However, the Commission is not obligated to compensate Ministers and therefore disclosures in relation to Ministers’ compensation may be found in the Annual Report on State Finances.

Total compensation for senior officers of the Department for the reporting period are presented within the following bands:

2017

2016

Compensation band ($)

530 001 - 540 000

1

-

470 001 - 480 000

-

1

390 001 - 400 000 Part year only in 2017

1

-

250 001 - 260 000

-

1

220 001 - 230 000

2

1

210 001 - 220 000

-

1

200 001 - 210 000

-

1

190 001 - 200 000

-

1

170 001 - 180 000 Part year only in 2017

1

-

140 001 - 150 000

1

-

130 001 - 140 000 Part year only in 2017

1

1

120 001 - 130 000 Part year only in 2017

1

-

110 001 - 120 000

-

1

80 001 - 90 000 Part year only in 2017

1

-

70 001 - 80 000

1

60 001 - 70 000

1

30 001 - 40 000

1

2017

$000

2016

$000

Short‑term employee benefits

1599

1955

Post‑employment benefits (a)

195

-

Other long‑term benefits

35

(35)

Termination benefits

214

60

Total compensation of senior officers

2043

1980

(a) Post employment benefits includes superanuation which was part of Short Term Benefits in 2016.

16. Income from State Government

Services received free of charge from other State Government agencies during the period:

Department of the Premier and Cabinet - corporate support services (c)

710

485

Department of Finance - accommodation lease services (c)

353

453

Department of Transport - planning services (c)

2

-

Department of the Attorney General - legal services. (c)

179

155

1244

1093

Royalties for Regions Fund

Regional Community Services Account(b) (c)

-

2

Regional Workers Incentive

35

24

35

26

Total income from State Government

27 915

28 597

(a) Service appropriations fund the net cost of services delivered. Appropriation revenue comprises a cash component and a receivable (asset). The receivable (holding account) comprises the budgeted depreciation expense for the period and any agreed increase in leave liabilities during the year.

(b) This is a sub-fund within the over-arching ‘Royalties for Regions Fund’. The recurrent funds are committed to projects and programs in Western Australian regional areas.

(c) This is a government controlled entity and is a related party (refer Note 13 ‘Related party transactions’)

23. Impairment of assets

There were no indications of impairment to property, plant and equipment and intangible assets as at 30 June 2017. The Commission held no goodwill or intangible assets with an indefinite useful life during the reporting period.

24. Payables

2017

$000

2016

$000

Current

Payables

750

399

Accrued salaries

63

245

Accrued expenses

480

192

Total assets payables

1293

836

25. Provisions

2017

$000

2016

$000

Current

Employee benefits provision

Annual leave including superannuation(a)

1487

1470

Long service leave including superannuation(b)

3103

2941

4590

4411

Other provisions

Employment on-costs(c)

23

21

4613

4432

Non-current

Employee benefits provision

Long service leave including superannuation(b)

736

911

736

911

Other provisions

Employment on-costs(c)

4

5

740

916

(a) Annual leave liabilities have been classified as current as there is no unconditional right to defer settlement for at least 12 months after the end of the reporting period. Assessments indicate that actual settlement of the liabilities is expected to occur as follows.

Within 12 months of the end of the reporting period.

1087

1127

More than 12 months after the end of the reporting period.

400

343

1487

1470

(b) Long service leave liabilities have been classified as current where there is no unconditional right to defer settlement for at least 12 months after the end of the reporting period. Assessments indicate that actual settlement of the liabilities is expected to occur as follows.

Within 12 months of the end of the reporting period.

1593

1523

More than 12 months after the end of the reporting period.

2246

2329

3839

3852

(c) The settlement of annual and long service leave liabilities gives rise to the payment of employment on-costs including workers' compensation insurance. The provision is the present value of expected future payments. The associated expense, apart from the unwinding of the discount (finance cost), is disclosed in Note 12 'Other expenses'.

(a) The 2016 actual has been recast to match current year’s reporting parameters.

(b) Note that the Australian Taxation Office receivable/payable in respect of GST and the receivable/ payable in respect of the sale/purchase of non-current assets are not included in these items as they do not form part of the reconciling items.

29. Services provided free of charge

During the period the following services were provided to other agencies free of charge for functions outside the normal operations of the Commission.

2017

$000

2016

$000

Equal Opportunity Commission

Executive Support

172

128

Office of Emergency Management

Accommodation and Utilities

147

Salaries and Allowances Tribunal

Corporate Services

20

15

Total services provided free of charge

339

143

30. Commitments

The commitments below are inclusive of GST.

2017

$000

2016

$000

Non-cancellable operating lease commitments

Commitments for minimum lease payments are payable as follows.

Within 1 year

2080

2649

Later than 1 year and not later than 5 years

39

2696

2119

5345

Capital expenditure commitments

The Commission has entered into a Memorandum of Understanding (MoU) with the Department of Finance - Building Management and Works for office accommodation with a three year and 4 month term in 2012, with two possible three year extensions. The first extension was exercised from 1 July 2015. Rent is payable at the start of each month, for that month. Provisions in the MoU require market rental review dates on the 1 July 2017 and 1 July 2019.

Capital expenditure commitments, being contracted capital expenditure additional to the amounts reported in the financial statements, are payable as follows.

Within 1 year

-

-

-

73

Other expenditure commitments contracted for at the end of the reporting period but not recognised as liabilities, are payable as follows.

32. Explanatory statement: Statement of comprehensive income

All variances between estimates (original budget) and actual results for 2017, and between the actual results for 2017 and 2016 are shown below. Narratives are provided for key variations selected from observed major variances, which are generally greater than:

5% and $514 180 for the Statements of comprehensive income and Cash flows

5% and $303 400 for the Statement of financial position

Variance

Note

Original budget 2017

$000

Actual 2017

$000

Actual 2016

$000

Variance between budget and actual for 2017

$000

Variance between actual results for 2017 and 2016

$000

(Controlled operations)

Employee benefits expense

1, A

20 649

18 607

17 745

(2042)

862

Supplies and services

4420

4263

4469

(157)

(206)

Depreciation and amortisation expense

215

60

204

(155)

(144)

Accommodation expenses

2454

2401

2181

(53)

220

Grants and subsidies

842

890

1032

48

(142)

Other expenses

259

64

78

(195)

(14)

Total cost of services

28 839

26 285

25 709

(2554)

576

Income

Revenue

User charges and fees

285

137

155

(148)

(18)

Other revenue(a)

108

331

227

223

104

Total revenue

393

468

382

75

86

Total income other than income from State Government

393

468

382

75

86

NET COST OF SERVICES

28 446

25 817

25 327

(2629)

490

INCOME FROM STATE GOVERNMENT

Service appropriation

B

26 636

26 636

27 478

-

(842)

Services received free of charge

1550

1244

1093

(306)

151

Royalties for Regions Fund(a)

42

35

26

(7)

9

TOTAL INCOME FROM STATE GOVERNMENT

28 228

27 915

28 597

(313)

(682)

Surplus/(deficit) for the period

(218)

2098

3270

2316

(1172)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

(218)

2098

3270

2316

(1172)

(a) The 2016 actual has been recast to match current year's reporting parameters.

Variances between estimate and actual

Employee benefits expense underspent by $2.042 million (10 per cent) partly due to vacancies not being filled ahead of the Agency Expenditure Review reductions, unfilled vacancies resulting from secondments to other agencies and the decline in Aboriginal trainees.

Cash and cash equivalents were higher than estimated (by $6.218 million) mainly due to an underspend of employee benefits of $2.042 million and a surplus carried over from 2015/16 of $3.270 million.

Compared to budget Other Current Assets were $703,000 less; however, this is offset by higher than anticipated Receivables relating to CEO recruitment and other recoverables of approximately $457,000.

Employee benefits expense was underspent by $1.919 million (18 per cent) mainly due to vacancies not being filled ahead of the expected reductions resulting from the Agency Expenditure Review.

The reduced revenue was a result of reduced fees for training programs both in charge rates and participants.

Variances between actual results for 2017 and 2016

Employee benefits expense increased by $862,000 (5 per cent) mostly as a result of termination payments under Section 56(3) of the Public Sector Management Act 1994.

Service Appropriation decreased by $842 000 mostly as a result of the introduction of the Workforce Renewal policy.

Cash and cash equivalents increased by $2.519 million (25 per cent) mainly due to an operating surplus of $2.098 million.

Compared to prior periods and budget, the variation in Payables is mainly attributable to monies paid to the Commission by the Australian Taxation Office (ATO) during June 2017. The amount of $357 000 was treated as a payable as it is due to be returned to the ATO.

The decline in Service Appropriation was mostly a result of reduced funding following the implementation of the Workforce Renewal Policy.

The decline in Employee Benefits was mostly a result of reduced expenditure following the implementation of the Workforce Renewal Policy.

33. Financial instruments

a) Financial risk management objectives and policies

Financial instruments held by the Commission are cash and cash equivalents, restricted cash and cash equivalents, loans and receivables and payables. The Commission has limited exposure to financial risks. The Commission’s overall risk management program focuses on managing the risks identified below.

Credit risk

Credit risk arises when there is the possibility of the Commission’s receivables defaulting on their contractual obligations resulting in financial loss to the Commission.

The maximum exposure to credit risk at the end of the reporting period in relation to each class of recognised financial assets is the gross carrying amount of those assets inclusive of any allowance for impairment, as shown in the table at Note 33(c) ‘Financial instruments disclosures’ and Note 18 ‘Receivables’.

Credit risk associated with the Commission’s financial assets is minimal because the main receivable is the amount receivable for services (holding account). For receivables other than government, the Commission trades only with recognised and creditworthy third parties. The Commission has policies in place to ensure that sales of services are made to customers with an appropriate credit history. In addition, receivable balances are monitored on an ongoing basis with the result that the Commission’s exposure to bad debts is minimal. At the end of the reporting period there were no significant concentrations of credit risk.

Liquidity risk

Liquidity risk arises when the Commission is unable to meet its financial obligations as they fall due. The Commission is exposed to liquidity risk through its trading in the normal course of business.

The Commission has appropriate procedures to manage cash flows including drawdown of appropriations by monitoring forecast cash flows to ensure that sufficient funds are available to meet its commitments.”

Market risk

Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the Commission’s income or the value of its holdings of financial instruments. The Commission does not trade in foreign currency and is not materially exposed to other price risks. The Commission is not exposed to interest rate risk because all cash and cash equivalents and restricted cash are non-interest bearing, and the Commission has no borrowings. As a result of not being exposed to interest rate risk, the Commission is not required to undertake an interest rate sensitivity analysis.

b)Categories of financial instruments

The carrying amounts for each of the various categories of financial assets and financial liabilities at the end of the reporting period are as follows.

c) Financial instrument disclosures

Credit risk

The following table details the Commission’s maximum exposure to credit risk and the ageing analysis of financial assets. The Commission’s maximum exposure to credit risk at the end of the reporting period is the carrying amount of financial assets as shown below. The table discloses the ageing of financial assets that are past due but not impaired and impaired financial assets. The table is based on information provided to senior management of the Commission.

The Commission does not hold any collateral as security or other credit enhancement relating to the financial assets it holds.

Ageing analysis of financial assets

Carrying amount

$000

Not past due and not impaired

$000

Past due but not impaired

Impaired financial assets

Up to 1 month

$000

1-3 months

$000

3 months to 1 year

$000

1-5 years

$000

More than 5 years

$000

2017

Cash and cash equivalents

12 710

12 710

-

-

-

-

-

-

Restricted cash and cash equivalents

62

62

-

-

-

-

-

-

Receivables(a)

797

736

50

-

11

-

-

15(b)

Amounts receivable for services

7028

7028

-

-

-

-

-

-

20 597

20 536

50

-

11

-

-

15

2016

Cash and cash equivalents

10 191

10 191

-

-

-

-

-

-

Restricted cash and cash equivalents

-

-

-

-

-

-

-

-

Receivables(a)

635

502

83

22

28

-

-

17(b)

Amounts receivable for services

6986

6986

-

-

-

-

-

-

17 812

17 679

83

22

28

-

-

17

(a)The amount of receivables excludes the GST recoverable from the Australian Tax Office (statutory receivable).

Liquidity risk and interest rate exposure

The following table details the Commission’s interest rate exposure and the contractual maturity analysis of financial assets and financial liabilities. The maturity analysis section includes interest and principal cash flows. The interest rate exposure section analyses only the carrying amounts of each item.

(a)The amount of receivables excludes the GST recoverable from the Australian Taxation Office (statutory receivable).

Liquidity risk and interest rate exposure

The following table details the Commission’s interest rate exposure and the contractual maturity analysis of financial assets and financial liabilities. The maturity analysis section includes interest and principal cash flows. The interest rate exposure section analyses only the carrying amounts of each item.

(a)The amount of receivables excludes the GST recoverable from the Australian Taxation Office (statutory receivable).

(b)The 2016 actual has been recast to match current year’s reporting parameters.

34. Events occurring after the end of the reporting period

There were no events occuring after the end of the reporting period that impact on the financial statements.

35. Affiliated bodies

Salaries and Allowances Tribunal

The Tribunal, established by section 5 of the Salaries and Allowances Act 1975, is a government affiliated body that received administrative support from, but is not subject to operational control by, the Commission. It is funded by Parliamentary appropriation of $906 000 for 2016-17 ($1 150 000 for 2015-16).

36. Contingent liabilities and contingent assets

Contingent liabilities

The Commission has no contingent liabilities.

Contaminated sites

Under the Contaminated Sites Act 2003 the Commission is required to report known and suspected contaminated sites to the Department of Environment Regulation (DER). In accordance with the Act DER classifies these sites on the basis of the risk to human health, the environment and environmental values. Where sites are classified as contaminated - remediation required or possibly contaminated - investigation required the Commission may have a liability in respect of investigation or remediation expenses.

Contingent assets

The Commission has no contingent assets.

37. Supplementary financial information

Write-offs

uring the financial year $4162.38 (2015-16: $23 205.59) was written off the Commission’s receivables relating to salary overpayments deemed unrecoverable under the authority of: